EXHIBIT 2.2
FORM OF OFFER LETTER TO HOLDERS OF SHORT-TERM DEBT
EXAMPLE
March 1, 1995
ADDRESS
Dear Mr. :
You may be aware that BTi has entered into an agreement with Dassesta
International S.A., a foreign investor ("Dassesta") in which Dassesta has agreed
to purchase 25,000,000 shares of BTi Common Stock at $0.60 per share, for a
total of $15,000,000 ("Proposed Offering"). The Proposed Offering is subject to
a number of conditions, including shareholder approval, and is expected to close
by March 31, 1995.
You have previously indicated your intention to convert your Bridge Loan to
BTI to an investment in Common Stock of the Company on terms set forth in the
Term Sheet, copy of which is attached hereto for your reference.
In order to position BTi for the future, we would like to reconfirm our
prior offer to convert your 10% Senior Secured Promissory Note ("Note") to BTi
Common Stock and simultaneously provide you the additional option to immediately
exercise your Stock Option at a 10% discount per share from the price to be paid
by our foreign investor. The closing of the conversion and related transactions
would be subject to some conditions, including the closing of the Proposed
Offering.
The following is a brief summary of some of the main terms of the
contemplated transaction:
1. CONVERSION. The conversion of your Note into Common Stock would occur
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three weeks subsequent to the closing of the Proposed Offering. For purposes of
conversion, the Company will increase the principal amount of your Note by 10%.
The conversion price will be $0.54 per share, a 10% discount off the $0.60 price
per share being paid by Dassesta in the Proposed Offering. (For example, a
$100,000 Note would convert into 203,704 shares of Common Stock.) The interest
accrued on the Note as of the closing would also be converted into BTi Common
Stock at the $0.54 per share rate.
You hold a Note in the principal amount of $100,000 which is dated MAY 2, 1994.
Therefore, with an anticipated closing of April 17, 1995, the conversion of your
Note and the accrued interest thereon would result in the issuance to you of
shares of Common
Stock as calculated below:
Principal amount of Note $100,000.00
10% increase 10,000.00
Interest on principal amount
of Note from issue date to
April 17, 1995 9,590.00
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Total $119,590.00
Divided by the per share
conversion price of: $ 0.54
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COMMON SHARES 221,463
2. STOCK PURCHASE/STOCK OPTION. As a part of the transaction in which you
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purchased your Note, you also received a purchase option agreement ("Existing
Option") to purchase certain securities of BTi. If the Proposed Offering closes
and you do not elect to convert your Note as described in Paragraph 1 above,
then the principal amount of the Note and the accrued interest thereon will be
paid in full and you will continue to hold your Existing Option to purchase
20,000 shares of BTi Common Stock (per $100,000 original Note amount), at $0.60
per share, which in your case amounts to an option to purchase a total of 20,000
shares of BTi Common Stock at $0.60 per share.
However, if you elect to convert your Note as described in Paragraph 1
above, then in lieu of your Existing Option you would have the choice to either:
(a) purchase 22,000 shares of BTi Common Stock at closing of the Note
conversion at $0.54 per share; or
(b) obtain a new five-year option to purchase 22,000 shares of BTi Common
Stock at $0.60 per share.
Your Existing Option would be canceled under both alternatives (a) and
(b). The alternatives described in (a) and (b) ARE ONLY AVAILABLE IF YOU
CONVERT YOUR NOTE PER PARAGRAPH 1.
3. REGISTRATION STATEMENT. If you convert your Note, BTi would commit to
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filing a Registration Statement with the SEC covering the converted stock
described in Paragraph 1 and the stock purchased in Paragraph 2 (but not stock
subject to the stock option described in Paragraph 2) within 90 days after the
closing of the transactions described above.
With respect to the above, you will find enclosed the following
documents: (a) a Consent and Waiver relating to the Proposed Offering with
Dassesta; (b) a Stock Purchase Agreement; (c) a Purchase Option Agreement; (d)
two forms UCC-2s and a
Release of Security Interest in Trademarks, Patents and Copyrights; and (e) for
your information, a set of Risk Factors, as well as BTi's most recent filed Form
10-K and Form 10-Q.
The following summarizes the documents you need to send to BTi in order
to participate in the above described transactions. Even if you decide not to
participate in the transactions, please sign and return the Consent and Waiver
relating to the Proposed Offering with Dassesta as soon as possible.
NOTE CONVERSION. In order to convert your Note, you must send to BTi:
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(a) your existing original Note which will be canceled upon the closing of
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the conversion. If you have misplaced or lost your original Note, please
immediately advise the undersigned by phone or fax so that we can send you
appropriate documents for signature.
(b) an executed Stock Purchase Agreement (which is enclosed). We have
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included two versions of the Stock Purchase Agreement reflecting the
alternatives ONLY AVAILABLE TO YOU CONCERNING YOUR EXISTING OPTION (SEE
PARAGRAPH 2 ABOVE) IF YOU CONVERT YOUR NOTE.
(1) If you elect to cancel your Existing Option to purchase 20,000 shares of
BTi Common Stock at $0.60 per share and in lieu thereof immediately purchase
22,000 shares at $0.54 per share, you need to sign Stock Purchase Agreement #1
which is enclosed, and initial Schedule A-1 which is attached to Stock Purchase
Agreement #1.
You need also to include a check payable to Biomagnetic Technologies, Inc.
in the amount of $11,880.00 in payment of the shares of Common Stock show
on Schedule A-1 under the heading "Cash Purchase", and return to BTi your
original Purchase Option Agreement.
(2) If you elect to cancel your Existing Stock Option to purchase 20,000
shares of BTi Common Stock at $0.60 per share and in lieu thereof receive a new
Stock Option for 22,000 shares of BTi Common Stock exercisable at $0.60 per
share, you need to sign the enclosed Stock Purchase Agreement #2 and initial
Schedule A-2 which is attached to the Stock Purchase Agreement #2. You need
also to sign and return to BTi the enclosed Purchase Option Agreement and
simultaneously return to BTi your Original Purchase Option Agreement.
(c) the executed Form UCC-2s and Release of Security Interest in Trademarks,
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Patents and Copyrights (the "Release"). Please note that the Release must be
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notarized. Your Note is secured by various property of BTi, and these documents
serve to release the security interest.
(d) the executed Consent and Waiver.
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In order to participate in the described transactions, all appropriate
documents must be received no later than March 17, 1995. All documents should
be sent to Biomagnetic Technologies, Inc., in the return envelope herewith
provided. The closing of the Note conversion is contingent upon the closing of
the Proposed Offering. Shortly after the closing of the Proposed Offering, the
Company will close the Note conversions which we anticipate will take place on
Monday, April 17, 1995, and at that time deposit your check (if applicable) and
deliver to you your Common Stock Certificate and, if applicable, a new
Purchase Option Agreement. The terms of the transaction will be governed by
the provisions of the enclosed documents, which you should review carefully.
If you have any questions concerning the above, please do not hesitate to
contact me or any other officer of this Company at (619) 453-6300.
Sincerely,
/s/ James V. Schumacher
James V. Schumacher
President and Chief Executive Officer
Enclosures